A firm has prepared the following binary integer program to evaluate a number of potential locations for new warehouses. The firm's goal is to maximize the net present value of their decision while not spending more than their currently available capital. Max 35x1 + 35x2 + 20x3+ 30x4 s.t. 12x1 + 10x2 + 4x3 +13x4 s 18 (Constraint 1) x1 + x2 + x3 + x4 2 2 {Constraint 2) x1 + x2 s 1 (Constraint 3) x1 + x3 2 1{Constraint 4) x2 = x4 {Constraint 5) 1, if location j is selected 0, otherwise X; = Solve this problem to optimality and answer the following questions:
A firm has prepared the following binary integer program to evaluate a number of potential locations for new warehouses. The firm's goal is to maximize the net present value of their decision while not spending more than their currently available capital. Max 35x1 + 35x2 + 20x3+ 30x4 s.t. 12x1 + 10x2 + 4x3 +13x4 s 18 (Constraint 1) x1 + x2 + x3 + x4 2 2 {Constraint 2) x1 + x2 s 1 (Constraint 3) x1 + x3 2 1{Constraint 4) x2 = x4 {Constraint 5) 1, if location j is selected 0, otherwise X; = Solve this problem to optimality and answer the following questions:
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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b. What is the net present value of the optimal solution? (Round your answer to the nearest whole number.)
Net present value
c. How much of the available capital will be spent (Hint: Constraint 1 enforces the available capital limit)? (Round your answer to the
nearest whole number.)
Available capital
Transcribed Image Text:1
A firm has prepared the following binary integer program to evaluate a number of potential locations for new warehouses. The firm's
goal is to maximize the net present value of their decision while not spending more than their currently available capital.
Max 35x1 + 35x2 + 20x3+ 30x4
s.t. 12x1 + 10x2 + 4x3 + 13x4 s 18 (Constraint 1)
x1 + x2 + x3 + x4 2 2 (Constraint 2}
x1+ x2 s 1 {Constraint 3)
x1 + x3 2 1 (Constraint 4)
x2 = x4 {Constraint 5)
1, if location j is selected
0, otherwise
X; =
Solve this problem to optimality and answer the following questions:
a. Which of the warehouse locations will/will not be selected?
Location 1 will
Location 2 will
Location 3 will
Location 4 will
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